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≡ L.A. OLYMPIC COST WORRIES ≡
“This lack of clarity exposes the City to substantial financial risk and undermines the long-standing ‘zero-cost’ principle under which the Games were approved. Given the magnitude and evolving nature of these negotiations, it is imperative that the City Council pursue all available measures to safeguard the City’s fiscal stability and ensure the uninterrupted delivery of core services to residents before, during, and after the Games.
“I THEREFORE MOVE that the City Council instruct the Chief Legislative Analyst, in coordination with the City Administrative Officer and the City Attorney, to prepare language for establishing a new section within the City Charter through the ongoing Charter reform process that codifies a ‘Zero-Cost Principle for the LA28 Games,’ ensuring that the City shall not incur unreimbursed costs associated with hosting the 2028 Olympic and Paralympic Games and no Legacy Fund shall be established until the City is reimbursed.”
The palpable angst of Los Angeles City Council members, vividly demonstrated by an angry Tuesday hearing of the Council’s Ad Hoc Committee on the 2028 Olympic and Paralympic Games over the organizing committee’s procurement policy manual, and continuing worry about a possible LA28 deficit that would have to be paid for by the City of Los Angeles and possibly also the State of California, spilled over late Tuesday into a motion made by Council member Monica Rodriguez, quoted in part above.
At specific issue in her motion are the continuing discussions over an “Enhanced City Resources Master Agreement” (“ECRMA”) between LA28 and the City, defining what services the City would “normally provide” and what added services – beyond the norm – that LA28 would pay for.
The current LA28 negotiating position has been criticized by City Attorney Hydee Feldstein Soto, who wrote last month in a memorandum made public:
● “The ECRMA as drafted by LA28 limits the obligation to reimburse City costs before LA28 is permitted to create its own legacy fund with the surplus.”
● “Thus, there are two remaining issues in the ECRMA that must be resolved in the City’s favor for LA28 to fulfill their promised ‘no cost to taxpayers’ foundational principle – (1) what happens if the federal government does not pay the assumed $1 billion [in security costs] and (2) what happens if the City’s extraordinary expenses exceed $1 billion?”
Rodriguez has picked up on this, first in a letter last week to LA28 chief executive Reynold Hoover that was reported on by Scott Reid of the Southern California News Group, and now in this motion.
Her timing is fortuitous in that a City Charter reform project is ongoing, and echoes a parallel tug-of-war over the City and Olympic costs back in 1978, when the International Olympic Committee awarded the Games to a private organizing committee in Los Angeles, after the City refused to guarantee the finances of the event.
To ensure this position did not change, a City Charter amendment was placed on the 7 November 1978 municipal ballot as “Charter Amendment N,” which opened with:
“Except as herein specifically permitted, the City of Los Angeles, its officers, employees, agencies and instrumentalities shall be prohibited both directly and indirectly from appropriating funds, issuing bonds, lending credit, diverting funds received or to be received under existing grants, levying taxes or assessments, incurring expenses, making or undertaking any capital expenditures, or entering into any agreements in aid or in furtherance of the promotion of the 1984 Summer Olympic Games unless the direct and indirect costs to be incurred (or incurred prior to the adoption of this section but after selection of the City of Los Angeles by the International Olympics Committee as the host city of the 1984 Summer Olympic Games) by the City of Los Angeles, its officers, employees, agencies and instrumentalities in connection therewith do not exceed the direct receipts received or to be received no later than June 30, 1985 by the City in connection with said 1984 Olympic Games.”
This was interpreted as requiring the City to be reimbursed for any expenses directly related to the 1984 Games, and passed overwhelmingly, by 74-26% (as Charter §436, it was repealed in 1993).
It appears Rodriguez is ready for a re-run.
¶
Another motion based on the unhappy Tuesday Council committee meeting came from Council President Marqueece Harris-Dawson and members Curren Price Jr. and Hugo Soto-Martinez, who submitted a Wednesday motion to try and place specific commitments on the LA28 organizers as to the amount of purchases it will actually make for the Games and from whom, including:
● “Through multiple engagements with LA28, the City has consistently called for a formal, written commitment in the procurement plan establishing a tiered vendor preference structure: City of Los Angeles businesses first, followed by Los Angeles County, and then the broader five-county region. As the public entity bearing primary financial liability for the Games, the City has both a responsibility and a right to ensure that the Games is a net positive to the City’s economy and that its small businesses are first in line to benefit.”
● “In its Impact and Sustainability report, LA28 has pledged to direct 75% of addressable spend to Los Angeles, San Bernardino, Orange, Ventura and Riverside counties and 25% to small businesses.
“However, LA28’s procurement plan falls significantly short of community expectations to meaningfully support businesses within the City of Los Angeles through LA28 procurement opportunities. lt provides no transparency on total addressable spend, no sector-specific allocations, and no anticipated contract values. Without clear accountability measures, large multinational firms could secure the majority of funding, leaving local businesses with only a small share of the overall economic benefit.”
So, the motion asks for policy and enforcement mechanisms “mandating that LA28 prioritize City of Los Angeles businesses, establish transparent procurement and contracting protocols while providing comprehensive quarterly reports.”
Both motions were referred, of course, to the Council’s Ad Hoc Committee on the 2028 Olympic and Paralympic Games.
Observed: The Council committee members were visibly upset at Tuesday’s meeting, including Rodriguez and Harris-Dawson, and the gloves are off, especially as the City’s financial situation remains precarious and incumbent Mayor Karen Bass is polling at 25% in advance of June elections and not leading these discussions.
A key to the success of the 1984 Olympic Games was the close cooperation – including on no fiscal responsibility for the City – between the organizing committee and City Hall. The lack of cooperation and coordination led to some of the problems at the Atlanta 1996 Games. So it is crucial that the LA28 organizers and the City get through this rough patch – somehow – together.
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